Southeast Asia’s leading private equity event that brings together the region’s leading CEO’s, chairmen and business owners focused on buyouts, growth capital, distressed asset and venture capital investments!

Speaking on a wide range of topics, such as effective exit strategies, due diligence processes, and regional PE trends, Elixir's co-founders were at center stage sharing their insights.

2012.11.05

The Financial Times published an article last week - October 28, 2012 - on the growing interest in private equity investments in Southeast Asia. The article was titled "Southeast Asia on Radar of Private Equity" and focuses on big name players, such as Kohlberg Kravis Roberts, Blackstone, and General Atlantic, entering the region.

It's a great endorsement of the attractiveness of the region for investment to have such names take notice. Malaysia and Indonesia have been experiencing 5% plus economic growth, despite global economic crises while the BRIC countries - Brazil, Russia, India, and China - have cooled off with significant signs of further economic turmoil and downside.

But the strategy these funds are bringing to the region has limitations. Most of the funds named in the article focus on buyout transactions. As the article indicates, that means targeting large, over-leveraged conglomerates, which present a number of problems - the article mentions some.

The problem with this approach is that there will only be a handful of deals that these funds can invest in. Most companies in the region will be too small to attraction the attention of these funds. More importantly, the large conglomerates being targeted are unlikely to have the exponential growth that the smaller mid-market companies are going to have.

We believe the real opportunity is investing in "right size" companies with the potential for exponential growth -- businesses that provide investors exceptional growth potential while mitigating the risks inherent in start-ups. To us, this is a sweet spot for risk reduction and upside potential.

According to the CEO of Malaysia Venture Capital Management Bhd. (MAVCAP), Elixir's new fund "has to bring in the technology... so as to benefit Malaysia. We expect 25 per cent rate of returns," he told Business Times recently. "The magic with this kind of partnership is that when we come up with USD $25 million, another USD $25 million [of capital commitment] appears."